As part of its increased drive into the country's helicopter market Eurocopter will set up a maintenance, repair and overhaul center for its Dauphin helicopter. The center will be near either Mumbai or New Delhi and be a joint venture with India's state-run Pawan Hans Helicopters.

Eurocopter, the helicopter manufacturing division European Aeronautic Defense and Space Co., has a foothold in the country's civilian market. It holds around a 35 percent share, said Rainer Farid, Eurocopter vice president for sales and customers relation in southern Asia.

He was speaking at India's major biennial defense Defexpo exhibition, the Sixth International Land and Naval Defense Systems Exhibition in New Delhi.

Around 220 Eurocopter units are being flown in India with businesses including Pawan Hans, which claims to be India's largest civilian operator. Hans was set up in 1985 and operates 36 helicopters including 26 Dauphin, seven Bell and two Russian-made Mil aircraft.

The Eurocopter announcement comes as other major international manufacturers, including Lockheed Martin Corp., indicated interest in the Indian defense market.

Indian contracts are potentially worth tens of billions of dollars to Lockheed for everything from fighter jets and military transport planes to complete missile systems, the company said at Defexpo, which had around 650 exhibitors.

Lockheed is looking at contracts for systems such as missile and fire-control commands as well as simulators for the C-130 transport plane, which India has already bought and is negotiating another order, the company said.

International interest in the Indian market was heightened this week when the government announced it would spend around $50 billion on weapons in next 20 years.

"India's defense expenditure is 2.5 percent of its (gross domestic product) and the economy is expected to grow at eight to 10 percent for the next two decades," said Defense Minister A. K. Antony during his opening speech at Defexpo. "The expenditure on defense in absolute terms is also bound to increase in equal proportion."

While more international firms will be allowed to bid for contracts, changes in the government's procurement policy document Defense Production Procedure '09 means more joint ventures with Indian firms will be expected.

"The recent introduction of the 'Buy-and-Make' Indian category in the DPP allows the Indian defense industry to forge joint ventures with any foreign company," Antony said.

Under the offsets clause of the DPP, foreign manufactures will have to invest in India's national defense sector at least 30 percent of the value of any contract worth more than $65 million. Banking facilities for such ventures have been overhauled to encourage such investment, Antony said.

The government will also soon produce its military requirement road map for the next 15 years.

Farid said the firm is talking to up to 50 companies in India to set up agreements to meet the government's offsets clause. These include deals regarding its Fennec helicopter for which trials are expected to be finished in December.

The Fennec is being offered for the 197 light utility helicopter contract for the Indian army, a contract that went out to tender in 2003 and is worth up to $600 million to buy 60 helicopters outright. The contract, still being considered by the army, would mean the remaining 137 are built under license by Hindustan Aeronautics Limited, already a partner with Eurocopter.

The light helicopters are to replace the army's aging fleets of Chetaks (Aerospatiale SA316 Alouette III) and Cheetahs (SE316B Alouette II), many built by HAL under license from Eurocopter.

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